CINDY

Good afternoon everyone, let me introduce myself and my partners. ​I am Cindy Shahira and
my partners are Syalsabila Haya, Noel Natanael, and Kamila Sahda Nuriah. We are from group
4. In this opportunity we would like to present about “expenditure cycle”.

(next)

This is our table of content​, we will explain about transaction cycle relationships, objectives
and activities, detail activities, threats and control, main technologies, and case.

(next)

First, We will explain ​transaction cycle relationships​.

(next)

There are three transaction cycle processes. The first one is expenditure cycle,

The expenditure cycle main role is ​to prepare and to provide labor, materials, and
physical plant​. Expenditure cycle have 4 subsystems:

- Purchasing/ account payable

- Cash disbursement: cash disbursement function is to pay cash for wages, material, and
purchasing for physical plant
- Payroll: the subsystem to record the labor and all the employees.
- Fixed assets: the function is to record physical plants.

And the second one is Conversion cycle, conversion cycle main role is to convert labor,
materials overhead become finished goods. There are 2 subsystem:

- Production, planning, and control: to record the planning execution and control of production.
- Cost accounting: the main function is to record all the cost.

The last one revenue cycle, The main role is selling the product to the customer, delivering
the finished goods to the customer and receiving the cash. There are 2 subsystem:

- Sales order processing: to process the sales and then to receive the cash, then the cash
again will be used by the expenditure cycle to pay labor, materials, and physical plant.
- Cash receipt

(next)

What is the Expenditure cycle?

Expenditure cycle is a recurring set of business activities and related information processing
operations associated with the purchase of, and payment for goods and services.
In other words, ​What it takes to purchase and pay for goods and services​.

(next)

The next one we will explain about the ​expenditure cycle based on this diagram​. Within
the organization, information about the need to purchase goods flows to the expenditure cycle from
the revenue cycle, inventory control, various departments, and production cycle. In the expenditure
cycle, the primary external exchange of information is with suppliers or vendors. Once the goods and
materials arrive, notification of their receipt flows back to those sources from the expenditure cycle.
Expense data also flow from the expenditure cycle to the general ledger and reporting system for
inclusion in financial statements and management reports.

(next)

HAYA

Next we will explain about objectives and activities.

(next)

So, ​the primary objective of the expenditure cycle is to minimize the total cost of acquiring
and maintaining inventory, supplies, and the various services the organization needs to function.

(next)

Management can achieve this objective to ​the four basic expenditure cycle activities​.
These include:

1. Ordering
2. Receiving
3. Approving Supplier Invoices
4. Cash disbursements

(next)

KAMILA

The  first  step  in  the  expenditure  cycle  is  to  ​order  materials,  supplies,  and 
services for the company​. 

(next) 

The  first  step  is  ​identifying,  what,  when,  and  how  much  to  purchase​.  Different 
departments in the company track their consumables and create a purchase requisition. 
They  make  purchase  requisitions  if  they  are  low  on  goods.  ​Purchase  requisition  is  a 
document  or  electronic  form  that  identifies  the  requisitioner;  specifies  the  delivery 
location  and  date  needed;  identifies  the  item  numbers,  descriptions,  quantity,  and  price 
of each item requested; and may suggest a supplier. 

(next) 

After  we  identify,  what,  when,  and  how  much  to  purchase,  we  have  to  ​select  a 
supplier  to  purchase​.  A  purchasing  department  employee  will  approve  the  request, 
choose a suitable supplier and create a purchase order.  

Most  companies  require  purchasing  agents  to  buy  from  an  approved  list  of 
vendors  and  require  supervisor  authorization  for  purchases. Langkah-langkah ekstra ini 
membutuhkan  waktu  dan  biaya,  tetapi  mereka  dapat  memastikan  bahwa  perusahaan 
memesan  produk  berkualitas  baik  dengan  harga  yang  wajar  dan  membatasi 
pengeluaran yang tidak perlu. 

(next) 

After  that,  we  will  create  a  PO  that  helps  us  ensure  that  every  purchase  is  made 
in  accordance  with  our  budget.  ​PO  is  a  document  that  formally  requests  a  supplier  to 
sell  and  deliver  specified  products  at  designated  prices.  It  is  also  a  promise  to pay and 
becomes a contract once the supplier accepts it. 

Many  companies  maintain  special  purchasing  arrangements  with  important 

suppliers.  ​A  blanket  purchase  order  is  a  commitment  to  purchase  specified  items  at 
designated  prices  from  a  particular  supplier  for  a  set  time  period,  often  one  year. 
Blanket  purchase  order  mengurangi  ketidakpastian  pembeli  tentang  sumber  bahan 
baku  yang  terpercaya  dan  membantu  pemasok  merencanakan  kapasitas  dan 
operasinya dengan lebih efektif. 

(next) 

NOEL 

There are three alternative approaches to inventory control :

The first one is ECONOMIC ORDER QUANTITY (EOQ),

EOQ​ is the traditional way to managing inventory,

(baca di ppt)

For EOQ an optimal order size to minimize the sum of several cost just like:

● Ordering costs​ is include all expenses with processing purchase transactions

 ● Carrying Costs ​are those associated with holding inventory
● Stockout Costs ​are those that result from inventory short-ages, such as lost sales or
production delays.

Reorder point adalah menentukan kapan harus memesan ulang barang. Perusahaan
biasanya mengatur titik pemesanan ulang berdasarkan waktu pengiriman dan tingkat safety stock
yang diinginkan untuk menangani fluktuasi permintaan yang tidak terduga.

(JANGAN DIBACA: EOQ adalah ukuran pesanan optimal untuk meminimalkan jumlah
pemesanan, pengangkutan, dan persediaan biaya.)

MATERIAL REQUIREMENTS PLANNING (MRP​) seeks to reduce required inventory levels

by improving the accuracy of forecasting techniques to better schedule purchases to satisfy
production needs.

For example : Departemen perencanaan produksi perusahaan yang menggunakan MRP

akan menggunakan perkiraan penjualan untuk menyiapkan jadwal terperinci yang menentukan
jumlah setiap produk untuk diproduksi dalam jangka waktu tertentu.

(JANGAN DIBACA: MRP berusaha untuk mengurangi tingkat persediaan yang dibutuhkan
dengan cara meningkatkan keakuratan saat perkiraan, manfaatnya untuk menjadwalkan
pembelian yang lebih baik untuk memenuhi kebutuhan produksi.)

JUST IN TIME INVENTORY (JIT) ​is an attempt to minimize, if not totally eliminate, Finished
goods inventory by purchasing and producing goods only in response to actual, rather than
forecasted,sales.

(JANGAN DIBACA: JIT Sebuah sistem yang meminimalkan atau secara virtual menghilangkan
persediaan dengan membeli dan memproduksi barang hanya dalam menanggapi aktual,
daripada yang diperkirakan, penjualan.)

(next)

After  placing  an order, a company needs to ​receive and store its purchases. They 

verify  goods  ordered  against  in the purchase order. When the delivery arrives, the 
Receive  clerk  compares  the  purchase  order  number  referenced  on  the  packing 
slip  with  the  open  purchase  order  file.  And  then  they count the quantity of goods 
delivered. And they will examine each delivery for signs of obvious damage. 

A  receiving  employee  will  fill  out  a  receiving  report  for  all  deliveries  detailing  the 
quantity and quality of the goods received.  

Selalu  ada  kemungkinan  pencurian,  maka  dari  itu  perusahaan  melacak 

dan  memperkirakan  kedatangan  paket  sehingga  mereka  memiliki  staf  untuk 
menerima  paket  tersebut.  Mereka  akan menyimpan barang yang diterima di area 
dengan  akses  yang  terbatas  untuk  memastikan  tidak  ada  yang  dicuri  atau  salah 
saat menyimpan. 

(next) 

There are three possible exceptions to this process, such as: 

(1) receiving a quantity of goods different from the amount ordered, 

(2) receiving damaged goods, and 
(3) receiving goods of inferior quality that fail inspection. 

How  To  resolve  exceptions  no  1?  Usually,  the  supplier  will  give  the  buyer 
permission  to  correct  the  invoice  for  any  different  in quantity. For the exceptions 
no  2 and 3, a document called a debit memo is prepared after the supplier agrees 
to take back the goods or to grant a price reduction. 

What  is  a  debit  memo?  ​a  debit  memo  is  a  document  used  to  record  a  reduction 
to  the  balance  due  to  a  supplier.  The  debit  memo  records  the  adjustment  being 
requested. 

(JANGAN  DIBACA:  debit  memo  mencatat  penyesuaian  yang  diminta.  Satu 

salinan  debit  memo  dikirim  ke  supplier,  dan  kemudian  membuat  dan 
mengembalikan  kredit  memo  sebagai  pengakuan.  Account  payable  department 
diberitahu  dan  menyesuaikan  saldo  akun  kepada  supplier  tersebut.  Kemudian, 
Salinan  debit  memo  juga  disertakan  pada  barang  ke  departemen  pengiriman 
untuk mengotorisasi pengembalian mereka ke pemasok) 

(JANGAN  DIBACA:  Salah  satu  cara  bagi  perusahaan  untuk  meningkatkan 

efisiensi  proses  ini  adalah  dengan  meminta  pemasok  untuk  memasang barcode 
atau  menambahkan  tag  RFID  ke  produk  mereka.  Salah  satu  pendekatan 
membuat penghitungan item menjadi mudah. 

Teknologi  EDI  dan  satelit  juga  memberikan  cara  lain  untuk  meningkatkan 
efisiensi  inbound  logistik.  Pemberitahuan  pengiriman  muka  EDI 
menginformasikan perusahaan ketika produk telah dikirim. 

Dengan  menggunakan  perusahaan  pelayaran  yang  truknya  dilengkapi  dengan 

terminal data yang terhubung ke satelit, sebuah bisnis dapat melacak lokasi pasti 
dari  semua  pengiriman  yang  masuk  dan  memastikan  bahwa  staf yang memadai 
akan  ada  di  sana  untuk  menurunkan  truk.  Supir  truk  juga  bisa  diarahkan  untuk 
menepi 

dermaga  pemuatan  khusus  yang  paling  dekat  dengan  tempat  barang  akan 
digunakan.) 

(next) 

CINDY 

After  we  received  the  goods  or  materials,  The  accounts  payable 
department  ​approves  supplier invoices for payment. Kewajiban untuk membayar 
supplier  muncul pada saat barang diterima. When a supplier’s invoice is received, 
the  accounts  payable  department  is  responsible  for  matching  it  with  a 
corresponding  PO  and  receiving  report.  This  combination  of  the  supplier  invoice 
and  associated  supporting  documentation  creates  what  is  called  a  voucher 
package.  Once  the  approver  has  verified  that  the  company  received  what  it  had 
ordered, the invoice is approved for payment. 

(next) 

There  are  two  ways  to  process  supplier  invoices,  referred  to  as  non 
voucher or voucher systems. 

(baca di ppt) 

Sistem voucher mempunyai tiga keunggulan dibandingkan sistem non 

voucher.  

Pertama​,  mereka  mengurangi  jumlah  cek  yang  perlu  ditulis,  karena 

beberapa faktur disertakan dalam satu Disbursement voucher.  

Kedua​,  karena  voucher  pencairan  dibuat  secara  internal  dan  dapat  diberi 
nomor sebelumnya untuk menyederhanakan pelacakan semua hutang. 

Ketiga​,  karena  voucher  memberikan  catatan  bahwa  faktur  supplier  telah 

disetujui,  sehingga  akan  mempermudah  penjadwalan  dan  memisahkan  waktu 
persetujuan dengan waktu pembayaran sehingga akan menjadi lebih efisien.) 

(next) 
 Perusahaan  global  biasanya  memproses  ulang  1  Juta  faktur  supplier 
setiap tahun. Efficiency can be increased by using EDI or ERS.  

kita  dapat  meminta  supplier  untuk  mengirimkan  faktur  secara  elektronik, 

oleh  EDI,  Hanya  saja fraktur yang gagal dalam proses pencocokan perlu diproses 
secara manual. 

Another  option  is  to  eliminate  supplier  invoices.  (ppt)  After  all,  for  most 
recurring  purchases,  companies  know  the  prices  of  goods  and  services  at  the 
time  they  are  ordered.  setelah  penerimaan  barang,  semua  informasi  yang 
diperlukan untuk membayar sudah diketahui.  

 So, ERS saves time and money by reducing the number of documents that 
need to be matched 

(next) 

For  ​cash  disbursement​,  The  cashier,  who  reports  to  the  treasurer,  is 
responsible  for  paying  suppliers.  This  segregates  the  custody  function 
performed  by  the  cashier.  The  authorization  and  recording  functions  performed 
by  the  purchasing  and accounts payable departments. Payments are made when 
accounts  payable  sends  the  cashier  a  voucher  package.  Meskipun  banyak 
pembayaran terus dilakukan dengan cek, penggunaan EFT dan FEDI meningkat. 

(JANGAN  DIBACA:  To  prevent  the  possibility  of  theft,  companies  have  a 
different  department  or  a  different  employee  ​disbursing  cash​.  They  have  a 
responsibility  to  study  and  mark  off  the  supporting  documentation  for  the 
payment.  The  cash  disburser  makes  a physical mark on the paper to "cancel" the 
documentation;  this  helps  the  business  keep  track  of  who's  been  paid  and 
prevents  employees  from  accidentally  duplicating  a  payment  using  the  same 
supporting documents.

(next)

HAYA

MANUAL PURCHASES SYSTEM

In this section, i would explain about manual purchases system flowchart. The purpose of
flowchart is to help you envision relationships between organizational units.The segregation
of duties and the information flow essential to operations and effective Internal Control.
The following discussion is based which presents a flowchart of a manual purchases system.

Okay, i will explain 5 department more detail;

The first , INVENTORY CONTROL DEPARTMENT

The first Activities the Inventory control department, based on inventory ledger is review drop
inventory records then the clerk prepared a purchase requisition, one copy is sent ro
purchase department and the second copy sent to Internal file then update Inventory ledger
and the last activities the clerk prepare summary of Inventory records, there are 2 copies one
copy is sent to the general ledger and the second copy is sent to internal files.

The second, PURCHASING DEPARTMENT

The first Activities the purchasing department receives the purchase requisitions then prepares
the purchase order (PO) for each vendor. There are five copies of them, one copy of the PO
is sent to internal file with the purchase requisition ,and the second copy of the PO is sent
inventory control department (to update records) ,the third copy is sent to receiving
department (to prepare receiving report) and the fourth copy is sent to to Account Payable
(AP) (for filling in the AP pending file), and the last copy is sent to last one copy of the PO is
sent to vendor (to confirmation).

The third, RECEIVING DEPARTMENT

The first activities the receiving department is goods arriving from the vendor with blind copy of
the PO, the second activities the clerk receiving department prepare receiving report there
are 5 copies of the receiving report, the one copy is sent to vendor, the second copy is sent
to purchasing department,the third copy is sent to inventory control department, the fourth
copy is sent to account payable and the last copy is sent to internal file.

The fourth, ACCOUNT PAYABLE DEPARTMENT

The first activities account payable is receive invoice from vendor then the second activities the
AP clerk reconciles the financial information ,Receiving reports,and invoice then make
purchases journal and then third activities the AP depart update to the supplier’s account in
the AP subsidiary ledger and the last after update in AP subsidiary ledger, the clerk prepary
summary of purchases journal there are 2 copies , one copy is sent to the general ledger and
the second copy is sent to internal files.

The five,GENERAL LEDGER DEPARTMENT

The first activities general ledger department is receive 2 documents, this is a summary of
purchase journal and summary of Inventory records and the clerk reconciles those
documents and the last post to the general ledger

With this step, the purchases phase of the expenditure cycle is completed

(next)
 KAMILA
Okay guys, in this section, I would explain The Cash Disbursement System, the cash
disbursement system consist of 3 department there are AP Department, Cash Disbursement
Department, General Ledger Department,

(next)

the cash disbursement system process begins in the AP department

ACCOUNT PAYABLE DEPARTMENT

In this AP Department, there is an Open AP file that contains AP Packets, which consist of 3
documents, there are receiving reports, supplier invoice and purchase order. Then, the AP clerk
reviews the AP packets and submits items due for payment. After that, the AP clerk sends the
AP Packet to the cash disbursement department to prepare cash disbursement.

CASH DISBURSEMENT DEPARTMENT

The cash disbursements clerk receives the AP packets from the AP Department and reviews
the documents for completeness and clerical accuracy. For each disbursement, the clerk
prepares 3 copies of check and records the check number, dollar amount, and other pertinent
data in the check register, which is also called the cash disbursement journal.

Then the 3 copies of check along with the AP Packets are given to the department manager's
cash disbursement to be signed. The first copy of the check is mailed to the supplier. The
second copy of the check along with the AP Packets are returned to the AP Department for
updating the AP record. The third copy of the check is given to the internal file. After that, the
clerk summarizes the entries made to the check register and sends a journal voucher with the
following journal entry to the general ledger department for posting to the general ledger.

(next)

After we finished the activities in cash disbursement department, then we go back to the AP
Department for updating the AP record

ACCOUNT PAYABLE DEPARTMENT

The AP Department receives the AP packets and the check from the cash disbursement
department. Then the AP clerks removes the liability by debiting the vendor’s AP subsidiary
ledger account. Next, the AP packets and the check are filed in the close AP file. Then the last
activity is the clerks prepare and send the AP summary to the GL department for posting to the
general ledger.
The last department in cash disbursement system is GENERAL LEDGER DEPARTMENT

The general ledger department receives the journal voucher from the cash disbursement
department and the AP summary from the AP department. Then the clerk posts the journal
voucher to the general ledger and reconciles the general ledger to the AP summary. Then the
approved journal voucher and AP summary are given to the internal file.

(next)

CINDY

Next, I’m gonna explain the example of documents used in each cycle

The first one is ​purchase requisition​,

Purchase requisitions are made to the responses from the inventory controller for
ordering the goods.

Ketika persediaan turun ke reorder point yang telah ditentukan, purchase requisition
disiapkan dan dikirim untuk memulai proses pembelian.

For efficiency purpose, the purchase requisition contains routine ordering information
taken from the inventory subsidiary ledger and valid vendor file​. This includes the name
and address of the primary supplier, the economic order quantity of the item, and the
standard or expected unit cost of the item.

(next)

The second one is purchase order,

Purchase order is a document form that formally requests a supplier to sell and deliver
specified products at specified prices.

The prepare purchase order function receives the purchase requisitions, which are
sorted by vendor if necessary.

A copy of the PO is sent to ​the vendor​. In addition, a copy is sent to the set up
accounts payable (AP) function for filing temporarily in the AP pending file, and a blind
copy is sent to ​the receive goods function​, di mana disimpan sampai persediaan tiba. The
last copy is filed in​ the open/closed purchase order file​.

Purchase Order consist of: Name of supplier and purchasing agent, Purchase order
date, Shipping method, Delivery location, and Details of items order.

(next)

The third one is receiving report​,

Setelah menyelesaikan penghitungan fisik dan pemeriksaan, petugas penerima menyiapkan
receiving report yang menyatakan jumlah dan kondisi dari barang.

The Receiving Report is a primary document used in this process, it includes the date goods
received, shipper, supplier, and PO number.

The receiving report shows the item, description, unit of measure, and quantity for each
item. Receiving report provides space for signature and comments by the person who
received and inspected.

One copy of the receiving report ​accompanies the physical inventories to either the raw
materials storeroom or finished goods warehouse for safekeeping.

Another copy is filed in the ​open/closed PO file​ to close out the purchase order.

A third copy of the receiving report is sent to the ​AP department​, where it is filed in the AP
pending file.

A fourth copy of the receiving report is sent to ​inventory control for updating the inventory
records.

And the last copy of the receiving report is placed in ​the receiving report file​.

(next)

HAYA

Threat And Control

General Threat​ :

1. Inaccurate or invalid master data

Impact:

● Asset company will be loss

● Production delays due inaccurate or invalid master data

(perusahaan akan membeli barang dari supplier yang tidak disetujui, karena itu kita bisa
mendapatkan bahan yang tidak bagus atau rusak sehingga kita harus menunda produksi
karena kekurangan bahan utama yang tidak terduga atau tidak perlu)

Causes :

● There is no verification to manage the data, so the data is not updated. (Transaction
Authorization)
● There is no segregation of duties to control the master data so only one employee who is
responsible for the master data expenditure cycle. So no one controls or checks him.
● No one supervises the in expenditure cycle master database, so anyone can change the
data. (Supervision)
● Not restrict access to expenditure cycle master data and not configure the system. Anyone
can make changes to master data. (Restrict Access).

● Okay guys i will explain about threat and control in general issues. The first threat in general
issues is …… how can it happen the first is because…. Impact for the company is….. How to
control the threat is… the second threat is...

Control

● By using data processing integrity control

● restrict access to expenditure cycle master data and configure the system so that only
authorized employees can make changes to master data
● Review of all changes to master data

2. Unauthorized Disclosure of Sensitive Information

Impact

● There can be a theft of company information to illegal purpose

● Exposed about special price supplies which given from special supplier

Causes

● There is no supervision in information company so anyone can illegally see the information
(supervision)
● There is no restrict data to control employee who authorized the sensitive information, so
company can't control who can enter to the information (Access Control)
● There is no segregation of duties to control the IT about sensitive information, so they can’t
check each other.
● There is no integrated system information like data encryption to keep sensitive information
safe.

Control

● The best way to mitigate the risk of threat is configure the system to ​limit employees’ ability
to use the system’s built-in query capabilities to specific tables and fields
● sensitive data should be encrypted in storage

3. Loss or destruction of data

Impact

● Reduce the productivity of company in operating or sales

● Exposure of confidential information
● Loss of customer loyalty

Why

● There is no supervision in master data so the data can easily theft, lost, or got destroyed
(supervision).
● There is no segregation of duties in control data, so the data cannot be checked by others
and give a chance to the only person who keeps the data to do fraud. (segregation of duties)
● There is no integrated system information to backup the data loss or destruction.
● There is no restricted access to master data so anyone has a chance to steal or destroy
the important data.

Control

● Make backup and recovery the master data, so if the data get loss or destroyed we have
alternative data.
● Update information system, to make a stronger security system and detect the weakness of
the system.

4. Poor Performances

Impact

● Customer unhappy and lose loyalty

● Productivity in company not maximum
● Make error in data or system

Why

● There is no segregation of duties in task in company, it makes one employee have high
responsibility and didn’t give maximum performances ( Segregation of Duties)
● There is supervision to control employee performance so the employee who lazy, neglectful,
or make error can't detected ( Supervision )
● There are no training given to employee make employee not have good skill in job
● Company doesn’t have good technology to support the operation system

Control

● Make managerial report to control about employee performances

Threat in Ordering

5. Stockouts and excess inventory

Impact :

● Customer not happy

● Loss sale and revenue

Why:

● There is no segregation of duties between people who manage physical inventory and
recording inventory. Make chance to error higher
● There is no verification in notes inventory and physical inventory cause nescience about real
condition inventory
● There is no accounting record, cause can't remember the updated inventory
● There is no system information integrated to reminder if stock near to stockouts

6. Purchasing item not needed

Impact

● make expense in company higher and reduce the revenue

Why

● There is no transaction authorization with manager when purchase the item, make item
purchased was not needed in company
● There is no accounting record In purchase to remember the purchase cause the purchasing
item already made and purchase the same item
● There is no supervision in purchase cause no one supervise the purchase system
● There is no system integrated information to update the item already purchased

7. Purchasing at inflated prices

I​mpact

● Reduce the revenue of company

Why

● There is no transaction authorization when purchase item causes purchase when the item
get inflated
● There is no accounting record so company don’t know the price normal of ite
● Don’t have supplier subscribe to give the best price of purchase
● There is no segregation of duties in people to purchase item and make the budget list
causes the purchase are not checked

(next)

NOEL
8. Purchasing goods and of inferior quality

Impact

● Costly production delay

● Customer not happy with the product and loss loyalty from customer

Why :

● There is no accounting information system to collection data about detailed product

● There is no supervision in purchase order, so we cannot check the supplier. Only approved
suppliers must be used.

9. Unreliable supplier

Impact

● Company late received the purchased product, and gave difficulty in operation because of
the late product.

Why

● There is no accounting record about the supplier, so the company can't record the
information about the supplier performances.
● There is no supervision in supplier performances , making companies accept the
unauthorized supplier.
● There is no system information integrated system like ERS to track the purchase order, so
we cannot automatically check about the purchase order which has not been delivered by
the supplier.

10​. Purchasing from unauthorized supplier ​(beli di supplier yang ga terintegrasi)

Impact:

● Item purchased have unknown quality, the item can have inferior quality or overpriced
● Make legal problem

Why

● There is no transaction authorization in purchase order so can't check the supplier in

purchase
● There is no restricted access in approved supplier list, make approved supplier list easier to
be changed by unauthorized employee
 ● There is no supervision in the approved suppliers list so no one controls and keeps the
approved supplier.
● There is no system information integrated like EDI for purchase orders in control procedures
so we can't receive each transaction that we made more accurately.

11. Kickback

Gifts given by suppliers to purchasing agents for the purpose of influencing their choice of
suppliers

Impact :

● Loss asset, especially for cash because of fraud from supplier and employee.

Why :

● There is no supervision in the employee or supervisor , so the employee or supervisor can

receive any gift from the supplier (gratitutes) and have a higher chance of fraud.
● There is no segregation of duties in job purchase, so employees can easily do work together
with suppliers.
● There is no accounting record to the item price list, so we can’t check the normal price for
items from the supplier.
● There is no job rotation make same employee close with the supplier.

Threat in Receiving ​:

12. Accepting unordered items

Impact :

● More Cost associated with unloading, storing, and later returning those items

Why :

● There’s no transaction authorization in PO so the order can’t be checked before the received
happen.
● There’s no supervision in the receiving department so the receiving department can receive
any item which does not write in purchase order.

Controls :

● The best control procedure to mitigate this threat is to instruct the receiving
department to accept only deliveries for which there is an approved
13. Mistakes in counting item received

Impact :

● There is no accurate perpetual inventory records and make error in financial report

Why :

● There is no supervision from the receiving clerk to sign the received item if it is already the
same as packing slip.
● There is no supervision in the receiving department especially at the receiving clerk, so
receiving clerks do poor performances.
● There is no segregation of duties between receiving clerk and receiving dock, so receiving
clerk can manipulate the data of received item.
● There is no system integrated information like barcodes and RFID to update automatically
and flag discrepancies about the receiving item.

14. Not verifying receipt of service

Impact :

● The company doesn't get service or items which are already paid.

Why :

● There is no segregation duties , so that when there is no service recipient controlling

can’t be checked each other
● There is no supervision accountable to each department, so the supervisor doesn't
know the actual budget and discrepancies.
● There is no accounting record about each service or item already paid in each
department, so that when it does not verify service acceptance, no one reminds it
because no evidence.

Controls :

● Budgetary controls
● Audits

15. Theft of inventory

Impact :

● The company incurred a loss

 Why :

● There’s no restriction access control to warehouse, so unauthorized employee can

enter the warehouse freely
● There is no segregation of duties between the employee who accepts the item and
the employee who records the item, make employee can easily steal the inventory
● There is no supervision to supervise the warehouse, so the chance to steal the
inventory was higher.
● There is no accounting record about the inventory, so employees are not careful to
keep and count the inventory.

Controls :

● Restriction of physical access to inventory, so only authorized employees can enter.

● Documentation of all transfers of inventory between receiving and inventory
employees
● Periodic physical counts of inventory and reconciliation to recorded quantities
● Segregation of duties; custody of inventory VS receiving employee

Threat in Approving Supplier Invoice

16. Error in supplier invoice

Impact :

● Account payable in company not updated so company didn’t know the actual payable they
have.

Why

● There is no segregation of duties in receiving and verification of supplier invoice, so the error
cant be detected or reminded
● No verification about the invoice accuracy to the supplier makes errors in data invoice.
● There is no supervision in supervision in employee receiving invoice, cause employee can
make error in receiving supplier invoice and no one remind him
● There is no integrated information system like ERS to evaluate or detect error in the invoice
from the supplier.
● There is no restriction on access in the ERS system so unauthorized employees can make
errors in the ERS system.

17. Mistake in posting to account payable

Impact

● Make errors in financial and performance reports that, in turn, can contribute to poor decision
making.
Why

● There is no integrated information system to update the account payable

● There is no supervision to employee in posting payable , causes employee make error and
not checked or supervise
● There is no segregation of duties in accounting records, making one employee have big
responsibility and doing error.
● There is no reconcile account payable periodically, so the company has an account payable
which is not updated.

Threat in Cash Disbursement

18. Failure to take advantage of discount for prompt payment

Impact :

● The cost of purchase is higher

Why

● There is no supervision to check the invoice date discount, so error from employee who
doesn’t read the discount cant be detected
● There is no accounting record from invoice given, so employee can’t remember the due date
of discount
● There is no accounting record in cash flow budget to be utilized to plan the purchasing
discount from account receivable and account payable
● No verification about the discount in notes or document purchasing.

19. Paying for item not received

Impact :

● Loss asset (cash) to fake/error purchase.

Why :

● There is no supervision to check the cash used from employees because employees
purchase to their needs.
● No verification in supplier invoice and quantity entered by inventory control causes the
amount of item purchased not checked
● There is no segregation duties in inventory control and employee who received supplier
invoice make the amount of item can be manipulated
● There is no accounting record in purchasing items to remember the purchased item.
20. Duplicate Payment

Impact :

● Decision in company can be wrong because the error cash flow from incorrect financial
record

Why

● There is no supervision in approved supplier invoice with the voucher package

● There is no accounting record in supplier invoice which is already paid, causes make paid of
invoice double
● There is no integrated system information to update the invoice already paid

21. Theft of cash

Impact :

● Loss asset in company and reduce the revenue

Having difficulty in operating system

Why :

● There is no restricted access to employee, so employee who doesn’t have authorization in

asset control can enter the asset control and make fraud
● There is no integrated system information to block an account which not used for payment
● Have old computer and browser making the information of asset can easily stolen by hacker
● There is no segregation of duties In treasure who record and paid, causes treasurer easily
doing fraud without checked
● There is no supervision in asset control so the chance to steal the asset was higher.

22. Check Alteration

Impact :

● Company pay not for company importance

Why :

● There is no supervision in check making, cause the check making can easily be made
without being checked by supervisor or manager.
● No verification about the check already made, causes company directly paid the fake check
● There is no accounting record in the bank in the daily list of checks, so the company can’t
reconcile the check already paid and notify if already fake check which is paid from the
company quickly.

23. Cash flow problem

Impact :

● Poor decision based on cash flow

Why :

● There is no supervision in make cash flow, so employee who make error in expenditure can’t
be corrected
● There is no segregation of duties in making cash flow, only one employee who has
responsibility to make and giving him a higher chance to do fraud in cash flow problems.
● There is no accounting record in cash flow to support the making of cash flow by evidence of
supporting documents.
● No verification of cash flow with the notes of documents from suppliers in expenditure.

(next)

​KAMILA

And next I would explain the main technology used in this cycle

IT can help improve the efficiency and effectiveness with which expenditure cycle activities
are performed. In particular, EDI, barcoding, and RFID can significantly reduce the time and
costs associated with ordering, receiving, and paying for goods. ​Prosedur pengendalian
yang tepat, terutama segregation of duties, diperlukan untuk memitigasi berbagai
ancaman seperti kesalahan dalam melakukan kegiatan siklus pengeluaran dan
pencurian inventory atau cash.

The main technology in this cycle consist of:

1. The first one is ​barcode​,

Barcode is a machine readable code in the form of numbers and a pattern of parallel lines of
varying widths, printed on commodity

Barcodes are applied to products as a means of quick identification. They are used in retail
stores as part of the purchase process, in warehouses to track inventory, to update
inventory will use the barcode reader to update (overwrite) the item quantity, and on invoices
to assist in accounting.

2. . The second one is ​RFID​:

Radio Frequency Identification (RFID) is a technology which is working on radio frequency
or radio waves used to automatically identify or track the objects.

RFID technology is also more efficient than barcodes because there is no need for a human
to align the barcode on the product with the reader. However, RFID technology is more
expensive than bar-coding and cannot be used for every type of product. RFID is also
important to periodically count inventory on hand and investigate any discrepancies between
those counts and the perpetual inventory records.

3. The third one is ​EDI​:

Electronic Data Interchange (EDI) technology was devised to expedite routine transaction
processing between manufactures, wholesalers, and retailers by connecting buyer and
seller computers via private network or internet. When the buyer’s computer system detects
the need to order inventory, it automatically transmits a purchase order to the seller, which is
approved and processed by the vendor system with little or no human involvement. EDI
helps tracking the location of incoming shipments and improves efficiency of inbound
logistics. Advances shipping notices inform companies when the products have been
shipped.

(next)

Now, I will explain about the ​case​.

This case about a successful story in the expenditure cycle. We get the case from SAP.com. The
company is AusNet.The successful story about the company is they get better relationships
with vendors and lower costs for them by using the Ariba Network. As one of Australia’s
leading energy provides, Ausnet services handles hundreds of thousands of assets
notifications each year. This makes detailed cost management per asset with SAP Ariba
Solutions, the company can allocate costs to each asset, automatically generate POs, and
route them to vendors through the ariba network. The result is greater control and visibility at
a lower cost.

(next)

Before we end the presentation, we want to give you a mini quiz on kahoot. Please prepare your
phone and enter the following code.

Thank you for attention about our presentation, sorry for our mistake,